The Parliamentary Standing Committee on Finance headed by BJP MP Bhartruhari Mahtab has raised serious concerns over the high vacancy rate within the Serious Fraud Investigation Office (SFIO), urging the Ministry of Corporate Affairs (MCA) to take immediate steps to strengthen the investigative agency’s workforce.
The Committee highlighted that SFIO’s existing staff shortages could severely impact its ability to handle the growing volume of complex financial fraud cases.
The Committee, in its latest report tabled recently in Lok Sabha, noted that out of 238 sanctioned posts, including 127 positions meant for officers on deputation, only 134 posts have so far been filled. This means nearly 47 per cent of SFIO’s sanctioned positions remain vacant, significantly weakening its investigative and prosecutorial capabilities.
The SFIO plays a crucial role in investigating complex financial frauds, and its effectiveness is paramount to ensuring financial discipline and corporate governance. However, the high vacancy rate remains a pressing issue, and if not addressed, could hinder SFIO’s ability to carry out its mandate efficiently, the report stated.
To enhance SFIO’s operational strength, the Committee has recommended that the MCA prioritise filling vacancies, particularly in the investigation and prosecution wings. It also urged the Ministry to consider creating a permanent cadre for SFIO to reduce its heavy reliance on officers coming on deputation from other departments.
Budget allocation and utilisation
The report also noted an increase in SFIO’s budget allocation, with estimates for FY 2025-26 rising to ₹50.69 crore, up from ₹43.01 crore in FY 2024-25. The increased budget is meant to accommodate additional staff and meet infrastructure requirements.
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Meanwhile, economy watchers stressed that merely increasing the budget without ensuring optimal staffing levels would not improve SFIO’s efficiency. The Ministry must ensure that the additional financial resources lead to tangible improvements in SFIO’s functioning, particularly in strengthening investigative capacity, they added.
Gaps in enforcement and need for stronger action
Beyond staffing concerns, the Committee criticised the MCA for lack of clear follow-up actions, monitoring mechanisms, and enforcement strategies in tackling financial frauds. While the Ministry has identified key areas where frauds are being committed, the Committee found gaps in the Ministry’s response to issues such as bank scrutiny to detect fraud patterns early; closure of Ponzi schemes to protect investors and addressing digital lending loopholes to curb financial misconduct.
The standing committee report also pointed out that the MCA’s response on penalties and convictions was vague, often lacking details on why higher courts did not uphold convictions. The Committee emphasized that SFIO must improve coordination with regulatory bodies, expedite trials, and enhance case management to ensure swifter legal outcomes.
Exploring external expertise for SFIO
Recognising the complexity of modern financial crimes, the Committee suggested that SFIO should explore the inclusion of Certified Fraud Examiners (CFEs) and other external experts to bridge knowledge gaps. “Given the evolving nature of financial frauds, SFIO should leverage specialised external expertise to strengthen its investigative capabilities,” the report recommended.
The Committee also urged the MCA to provide a detailed status report on SFIO’s pending cases, including the effectiveness of legal actions taken. It stressed that enhanced coordination between SFIO, banks, and regulatory agencies is crucial to ensuring timely action against corporate fraudsters.
Way forward
With corporate fraud cases becoming more sophisticated, the Committee’s recommendations underscore the urgent need to bolster SFIO’s institutional framework. The focus on filling vacancies, improving enforcement mechanisms, and leveraging external expertise reflects a broader effort to strengthen India’s financial regulatory system.
The ball is now in the MCA’s court to act on these recommendations and ensure SFIO is fully equipped to fulfill its mandate effectively, economy watchers said.
